Possible first property. What do you think?

[Justin Seng]

Possible first investment property: BRRRR Up for $75,000 3 bed 1 bath (On market 286 days) Purchase $60K Rehab $10K Closing Costs $3K ARV $100K Cash Purchase or Hard money if it works and I can get it Refi after 6 months for 70% ARV... $70K (30 year at 3.8%) Loan Fees: $2500 Rent: $1250 Payment: $325 Cap Ex/Repairs: $125 Vacancy: $60 Insurance: $75 Taxes: $365 Cash Flow $300 Total invested $5500

[Chris Jensen]

@Justin Seng, I would look at it this way. Given your assumptions for purchase, rehab, ARV, seasoning period, and refi terms, you'll end up getting most of your money out. One thing to keep in mind is debt service during the seasoning period if you use hard money.

Anyway, at this point, it's a typical deal analysis using $100k market value and your $5,500 total invested. Rent is a bit more than the 1% rule, so that's good. Assume 50% expenses excluding debt service, and you're at $625 NOI. Subtract $325 debt service and you're at $3,600 ($300*12) net cash flow annually. Not too bad at all with so little of your own money tied up in equity. That's the power of the BRRRR approach!

Now having said all that, I would double and triple check all your assumptions. For example, if the property has been on the market for 286 days, it could be that there are more than $10k (rehab) reasons why. You might see how the numbers look if you double the rehab. ARV would be another assumption to test, as would rents. But you get the picture.

Best of luck on your first foray into REI, we're rooting for you!